STOCK MARKET HISTORY: PART 5
So far we’ve discussed the need to be realistic, to stay calm and to forget trying to time the market. The next lesson is to keep it simple. The rules of sensible investing are, in fact, relatively simple. Unfortunately, the investment industry seems to prefer complexity. Twice in recent history, that complexity has sent markets tumbling. But of course the lessons of market history often go unlearned and, just 20 years later came another crash – largely caused by investments that were so complex that not even the professionals understood them. Yet still there are some who just don’t get it. Even after what happened in 1987, and again in the Credit Crunch, the industry continues to peddle complex investments – and investors continue to buy them. So, what’s answer?